Approved by the Transportation Policy Committee on March 17, 2016
Approved by the Public Policy Committee on May 13, 2016
Adopted by the Board of Direction on July 9, 2016
The American Society of Civil Engineers (ASCE) supports innovative financing programs for transportation projects and advocates making programs available in all states. Additionally, the states and federal government should make every effort to develop new programs and/or additional flexibility in innovative procurement approaches.
ASCE supports the following changes to enhance the existing programs that seek to leverage existing revenue streams:
Transportation Infrastructure Finance and Innovation Act (TIFIA)
- The TIFIA process for review, approval and negotiation is regarded as lengthy and should be accelerated;
- TIFIA resources should be increased to facilitate processing more loans in order to meet program funding levels, with funding for the program increased as needed to match a growing demand for credit assistance that can be served; and
- TIFIA loans should be permitted to be "fully subordinated." The current TIFIA legislation is written such that TIFIA loans are subordinate to other creditors. However, in the event of default, the TIFIA loan advances to parity status with other creditors under the "springing lien" provision. It is thought by some that this has limited the availability of other credit. The issue is controversial, with pros and cons on both sides, but reform should be seriously considered.
State Infrastructure Banks (SIBs):
- All states and the five territories are authorized and should enter into cooperative agreements with the Secretary of Transportation as appropriate to establish infrastructure revolving funds (often as State Infrastructure Banks, or SIBs) eligible to be capitalized with Federal transportation funds; and
National Infrastructure Bank (NIB)
- ASCE supports the establishment of a National Infrastructure Bank with an initial focus on transportation-related investments and flexibility to expand to other sectors; and creating a NIB provides another finance tool that can be used to support projects of regional and national significance.
Grant Anticipation Revenue Vehicles (GARVEEs):
- Increase the flexibility of GARVEE bond repayment methods. For example, utilize the total apportionment amount as a source of repayment (i.e., all funding categories), so that no particular funding category is overburdened.
Innovative financing techniques can greatly benefit infrastructure development by better leveraging available resources to deliver more capital. As such, they can have a powerful effect on delivering projects and public benefits sooner as compared to conventional methods. This has been the approach in many states where expanded and accelerated transportation investment programs have been successful. Innovative financing techniques, including toll road-based funding, figure heavily in many of these state programs.
The sources of transportation funding are shifting more and more from federal to state and local resources to fund the growing need for transportation improvements. The innovative finance changes in Moving Ahead for Progress in the 21st Century (MAP-21) and Fixing America's Surface Transportation Act (FAST) have been a good start, but more needs to be done to expand their scope, and new programs or approaches must be introduced. We must find new and innovative ways to finance the critical transportation infrastructure needs of the nation.
In addition, technological advancements are providing new capabilities, flexibility, and efficiencies for roadway pricing and collection of user fees. These capabilities should be fully explored to support innovative financing methods.
Financing alternatives however, cannot replace a public commitment to funding. Innovative financing techniques allow projects to be accelerated to deliver benefits sooner by efficiently borrowing against future revenues available for transportation funding. Without innovative financing programs, borrowing for project construction could be significantly more costly or not possible. Financing by any technique does not supplant the need for adequate user fees or other sources of revenue and funding to eventually pay for projects.
ASCE Policy Statement 496
First Approved in 2002
The other ASCE policies that relate to innovative financing are:
- PS 382 Transportation Funding
- PS 562 Public-Private Partnerships
- PS 434 Transportation Trust Funds
- PS 532 National Infrastructure Bank